Piper Jaffray estimates that the total online advertising market will reach $55 billion in 2010. That’s a 27% CAGR from 2005 levels.
SG Cowen says companies will spend $17.3 billion in paid search and $12.4 billion in other forms of online advertising.
So this is a huge growth industry.
A professor of entrepreneurship once told me that while most start-up companies go out of business in the first five years, he claimed that 80% of businesses started in an industry whose growth rate exceeded 10% annually would be in business after five years.
If that is true, it is more important to start a company in a growth industry than almost anything else. If you are in a growth industry, the rising tide tends to lift all boats, including yours.
If search engine spending keeps rising at 27% per year, a lot of companies will make a lot of money in this industry. Agencies who manage PPC campaigns, SEO firms, analytics companies, web site publishers with high traffic — all can do very well in the coming years.
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